India’s new-age manufacturers to benefit from $3 trillion global AI investment cycle: Avendus Capital

India’s new-age manufacturing sector could benefit significantly from a $3 trillion global AI infrastructure investment cycle, according to a report by Avendus Capital.

The investment banking firm has identified defence and aerospace, space technology, robotics and automation, semiconductors, energy transition, and advanced materials as the sectors poised to drive India’s next phase of industrial growth, offering key opportunities for domestic companies.

The report highlighted 2027–28 as a critical period for commercialisation as companies move from policy support and project approvals towards production.

The opportunity is being driven by rising global investments in AI infrastructure, increasing demand for energy infrastructure, and growing geopolitical security concerns. India’s domestic demand, engineering talent and policy framework could help manufacturers reduce import dependence and build globally competitive capabilities.

“India's new-age manufacturing opportunity is substantial, but its right-to-win manifests in select segments,” said Koushik Bhattacharyya, Managing Director and Head of Industrials Investment Banking at Avendus Capital.

With more than 80% of the $3 trillion AI infrastructure investment yet to be deployed globally, India has an opportunity to capitalise on its domestic demand base, engineering capabilities, and policy support, he said.

Semiconductors and space technology are among the segments showing significant growth potential. India’s semiconductor consumption is projected to more than double from $49.5 billion in 2025 to $106.5 billion by 2030, creating opportunities in chip design, packaging, testing, and specialised materials.

India’s space economy is expected to expand more than threefold, from approximately $13 billion in 2025 to $44 billion by 2033. Domestic defence production is projected to reach around $31.6 billion by 2030, while the robotics market could grow nearly fourfold to $4.6 billion by 2030, supported by wider adoption and import substitution.

The report also expects India’s clean-energy manufacturing ecosystem to move further upstream over the next five years. By the end of the decade, the country could establish an integrated solar manufacturing chain spanning ingots to modules, several gigawatt-hour-scale battery cell plants, and commercial production of indigenous electrolyser stacks and rare-earth-free motor technology.

Advanced materials represent another emerging opportunity, with rising domestic demand and heavy import dependence creating scope for local capacity building. Recycling is expected to scale first, followed by battery materials, while rare-earth magnet manufacturing could advance with policy support.

The coming years will test India’s ability to translate these opportunities into commercially viable manufacturing capabilities, the report said.